A Well Regulated Militia Post New Topic  New Poll  Post A Reply
my profile | directory login | register | search | faq | forum home

  next oldest topic   next newest topic
» A Well Regulated Militia » General Discussion » The Political Front » Ring Around A Rosey, Pockets full of Posies

 - UBBFriend: Email this page to someone!    
Author Topic: Ring Around A Rosey, Pockets full of Posies
The Answer
NCO Contributor
Member # 4133

Icon 1 posted      Profile for The Answer     Send New Private Message       Edit/Delete Post   Reply With Quote 
And they all fall down.

The equities market took hits last thursday and friday, then a huge hit monday, then a turn back up tuesday, a slight fall wednesday, and then another huge hit thursday. Overall, the DOW is down 10+%, meaning the stock market is in "correction" area.

Will they continue to fall, and lead to bankruptcy and liquidation and recession and maybe more? Or will they mellow out? Or will the Fed intervene to inflate the bubble a little more to try to save time?

Treasury yields are rising (= their prices are falling). The Fed plans to hike rates 3-4 times this year. The treasury department will sell $1 trillion in notes this year (as rates rise...). The national debt is north of $20 trillion. The expected deficit this year is over $1 trillion. If rates continue to climb, expect all kinds of debt to explode.

Tune in next time...

--------------------
Semper Vigilantes, Numquam Exspectantes

Always Watching, Never Waiting

Posts: 606 | From: Somewhere in these blue ridged mountains | Registered: Apr 2009  | Report this post to a Moderator
airforce
Administrator Officer Contributor

Member # 523

Icon 1 posted      Profile for airforce     Send New Private Message       Edit/Delete Post   Reply With Quote 
If I could predict what the stock market will do, I'd be a wealthy man. Literally.

Onward and upward,
airforce

[ 02-08-2018, 09:07 PM: Message edited by: airforce ]

Posts: 17543 | From: Tulsa | Registered: Jan 2002  | Report this post to a Moderator
airforce
Administrator Officer Contributor

Member # 523

Icon 1 posted      Profile for airforce     Send New Private Message       Edit/Delete Post   Reply With Quote 
Is the bust here? It's a 25 minute audio file at the Mises Institute. Whether you're an investor or not, it's worth a listen.

quote:
With stocks markets in turmoil earlier this week, the Mises Institute's resident expert on booms and busts join Jeff Deist to make sense of it. Will new Fed Chair Jerome Powell do everything possible to prop up markets, or will he be more hawkish than Janet Yellen? What kinds of indicators does Mark look for to predict trouble (hint: it's not the VIX). Why does the volume of margin loans matter, and why is the Russell 2000 Index a better predictor than the Dow or Nasdaq? Are cryptocurrencies now bound up with macro trends? And is Austrian business cycle theory necessarily incomplete as a tool to help investors?
Onward and upward,
airforce

Posts: 17543 | From: Tulsa | Registered: Jan 2002  | Report this post to a Moderator
The Answer
NCO Contributor
Member # 4133

Icon 1 posted      Profile for The Answer     Send New Private Message       Edit/Delete Post   Reply With Quote 
I've always got 25 minutes for the Mises institute.

I don't have a dog in this fight - no money in the market (no money at all, really). All of my assets...you'd have to actually take them from me for me to experience a total loss. But stocks are promises. All non-physical financial instruments are promises. Promises can be broken.

--------------------
Semper Vigilantes, Numquam Exspectantes

Always Watching, Never Waiting

Posts: 606 | From: Somewhere in these blue ridged mountains | Registered: Apr 2009  | Report this post to a Moderator
The Answer
NCO Contributor
Member # 4133

Icon 1 posted      Profile for The Answer     Send New Private Message       Edit/Delete Post   Reply With Quote 
I am interested in the state of the market because I have a philosophy of economics and, being someone that values truth over my beliefs, I want to see if it turns out right.

Also, when the market goes awry, politics and culture goes awry, crime goes up, people become angry, and shit goes down. It is possible that a stock market collapse could trigger the deeper social/political collapse.

The biggest issues are and will be:

1. The size of the federal debt

2. the interest rates

3. the proportion of annual federal spending that is merely paying interest on the debt (not principal)

4. the treasury yield curve. watch for flattening and inverting.

4. the value of treasury bonds and notes circulating in the market. watch supply to go up. see where prices/yields go.

5. the proportional inverse change in "safe" assets like gold and precious metals, treasury bonds, and AAA rated corporate bonds VERSUS the change in "risky" assets like stocks and junk bonds. If both safe and risky assets are falling, that is a bad thing - that means investors don't trust anybody. If safe assets rise while risky assets fall, investors are still playing the game.

The stock market only sometimes picks up on these fundamental signals. Eventually they will always see the light.

--------------------
Semper Vigilantes, Numquam Exspectantes

Always Watching, Never Waiting

Posts: 606 | From: Somewhere in these blue ridged mountains | Registered: Apr 2009  | Report this post to a Moderator
airforce
Administrator Officer Contributor

Member # 523

Icon 1 posted      Profile for airforce     Send New Private Message       Edit/Delete Post   Reply With Quote 
I don't think it's coincidental that the stock market dropped while, at the same time, the GOP abandoned any pretense of being fiscally conservative. As a couple political observers have already said, the Tea Party has died.

Onward and upward,
airforce

Posts: 17543 | From: Tulsa | Registered: Jan 2002  | Report this post to a Moderator
The Answer
NCO Contributor
Member # 4133

Icon 1 posted      Profile for The Answer     Send New Private Message       Edit/Delete Post   Reply With Quote 
Peter Schiff in 2006. Still applies today.

https://www.youtube.com/watch?v=jj8rMwdQf6k

http://www.csaba.se/2009/09/26/peter-schiff-mortgage-bankers-speech-2006-complete-transcript/

"But let me first talk about the broader economic picture and where we are as a nation. Sure, when we were first formed as a republic a couple hundred years ago, the reason why we prospered, and the reason why we became the world’s wealthiest creditor nation (back in 1980 anyway) was because we had a comparative advantage in economic freedom. Taxes were much lower, the government was much less intrusive, here in America, then were the kings and the despots all over Europe. So the American colonies and our new country prospered. And we certainly borrowed a lot of money from the Europeans in the 19th century, but what we did with that money – we invested that money in factories, in infrastructures – we made capital investments. And, by taking that money and building factories. We became the world’s leading manufacturer and exporter of high quality, low cost consumer goods. Even if we eventually paid the highest wages in the whole world, American products were still the cheapest in price and quality. And because we made productive use of the money that we borrowed from the Europeans, we were able to repay the debt. You see, when you borrow money and build a factory the factory produces consumer goods, the consumer goods are sold. We sold those consumer goods – automobiles, sawing machines, dishwashers, we sold all these goods to the Europeans and we paid off our debts. And we went from a debtor nation to a creditor nation. But we had more foreign assets, that were owned by Americans, than all the other creditor nations in the world combined. We were the world’s biggest lender around the world. Americans were wealthy lenders, we had a high savings rate.

All that is different in modern America. Today the United States is not the world’s larges creditor nation – we are not even a creditor nation. We are the world’s largest debtor nation. In fact, we owe more than all the debtor nations of the world combined. We no longer flood the world with high quality, low cost manufacturing goods. We flood the world with our paper currency. Our “IOU’s”, because we no longer possess the industrial might or capability of producing those goods ourselves. Instead of being the world’s biggest lender, we are the world’s biggest borrowers. The United States routinely borrows from the poorest nations in the world. Now, according to modern economic thinking, this new state of affairs is somehow sustainable and a viable symbiotic relationship between America and the rest of the world. The relationship is: America consumes – and everybody else produces. America borrows and everybody else saves. And on the surface, potentially that argument may make sense. Without American consumption, what would all these Chinese do for jobs? As it was pointed out by Barry, it’s not about jobs, it’s about consumption. It’s about standards of living. You don’t want jobs just so you can work, you want jobs so that you can consume, so that you can have a higher standard of living. The fact that the Chinese get jobs in exchange for the products they give us doesn’t do any good for the Chinese. The Chinese are perfectly capable of consuming their output themselves. They don’t need their government to artificially suppress the exchange rate of the Yuan so that they can artificially elevate the value of the Dollar so that the Americans get to consume all the goods that the Chinese could have consumed had it not been for that monetary policy. But this current dynamic, where we don’t save and we don’t produce, is not viable. It is no more viable than the economic models that existed in the 1990’s with respect to internet stocks or technology companies, where Wall Street had people believe that stock prices could rise regardless of the fact that the companies had no earnings, paid no dividends. Without any regard to any fundamental measure-evaluation we were told that it was a new era, and we saw what happened there. And the same Wall Street economist that told us the internet era was a new era are now telling us that this current era of American consumption and global production is viable. And it is not.

I will give you a quick little analogy and then move on to another subject. I mentioned this on my website and I use it on various speaking engagements. But to describe this dynamic – assume that a group of castaways are stranded on an island. Let’s say five of them are Asian and one of them are American. And when they are stranded on this island, they need to divide up the workload. So one of the Asians is given the job of hunting, looking for meat. Another one is going to be fishing, trying to get fish. Another one is in charge of scourging the island for vegetation. Still another one gets the job of looking for wood to build a fire and cook the meal. And then it comes down to the American and they say “what job should we assign the American”? Well the American gets assigned the job of eating. And so at the end of the day, all these Asians gather around this big table after a hard day of forging and hunting and fishing and they prepare to feed this American who did nothing all day but sun himself on the beach – he had a service economy. At any event, a modern economist who is looking at this little island’s economist would say that the American is the key to the whole thing. Without the American, and his ravenous appetite, these poor Asians would have nothing to do all day. They would all be unemployed.

Well, the reality is that the Asians are perfectly capable of consuming the food themselves. Now, perhaps if they didn’t have to spend all day feeding this fat American, they wouldn’t have to work this hard. Maybe they could pursue other interests that they had. The best they could do to improve their own standards of living is to kick the American off the island. Off course when that happens, the American is in trouble because now he doesn’t have five Asians doing all his work. You know, it reminds me a lot about that book, Tom Sawyer. You know where Tom is able to convince all his friends to whitewash this fence for him. And to not only do that, but to pay him for the privilege. Because Tom Sawyer got his friends so convinced that there was so much joy in this toil that it was worth paying him. So he got the world to do his chores. And little did Samuel Clemens realize that that little passage from that book would one day form the basics of the global economy. Where America convinced a billion Chinese to paint our fence and pay us for the privilege. That is going to end. In fact, the Chinese have been talking this week about diversifying, you know out of their one trillion Dollars in reserve, of course they can’t diversify out of them, they are stuck with them. But the minute they stop buying Dollars it is over."

--------------------
Semper Vigilantes, Numquam Exspectantes

Always Watching, Never Waiting

Posts: 606 | From: Somewhere in these blue ridged mountains | Registered: Apr 2009  | Report this post to a Moderator
   

Quick Reply
Message:

HTML is not enabled.
UBB Code™ is enabled.

Instant Graemlins
   


Post New Topic  New Poll  Post A Reply Close Topic   Feature Topic   Move Topic   Delete Topic next oldest topic   next newest topic
 - Printer-friendly view of this topic
Hop To:


Contact Us | A Well Regulated Militia

All information posted on this site is the private property
of the individual who posted the information and AWRM.org,
and may not be reproduced anywhere without permission.
© 2001-2017 AWRM.org All Rights Reserved.

Powered by Infopop Corporation
UBB.classic™ 6.7.2